$4.$ Application: Demand elasticity and agriculture

The following graph illustrates the market for pistachios. It plots the monthly supply of pistachios and the monthly demand for pistachios. Suppose new gathering technology is invented, allowing growers to produce more crops using the same amount of resources.

Show the effect this shock has on the market for pistachios by shifting the demand curve, supply curve, or both.

Several growers are happy with this advancement in technology because now they can sell more crops, which they believe will lead to increases in

revenue. Using elasticities, you will be able to determine whether this price change will lead to a rise or fall in total revenue in this market.

Using the midpoint method, the price elasticity of demand for pistachios between the price levels of $$10$ and $$8$ per ton is

$,$ meaning that

between these two points, demand is

$.$ Thus, you can conclude that the grower's claim is

due to the technological improvement.

Confirm your previous conclusion by calculating total revenue in the pistachio market before and after the technological improvement. Enter these

values in the following table.

Total Revenue $($Thousands of Dollars$)$